Today’s pick is RELIANCE [stockquote]RELIANCE[/stockquote]. The stock started the year with a fall to Rs. 650 levels by the end of middle of May. After finding support, the stock has been on an uptrend ever since. It saw its 52 weeks high of Rs. 955 in January and has since been on a fall to find support along the trend-line. In the last three months, the stock moved -2% Vs. -4% of the Nifty’s.
Oscillator RSI and CMO are drifting towards over-sold bounds. The stock is trading close to the lower edge of Bollinger bands giving out a slight bullish signal. Short-term technical saw a 9×4 bearish signal a couple of days ago.
The MACD line and signal line are moving parallel to each other without giving any directional bias. Also, Long-term and short-term GMMA lines are currently contracting but are unable to give any direction for the stock.
RELIANCE’s average correlation with the Nifty is 0.72 which is positive and strong. The scrip will be replicating movement of Nifty quite closely. [stockquote]NIFTYBEES[/stockquote]
RELIANCE has a historical volatility in the range of 0.3 to 0.7. The scrip’s volatility is currently in the higher end of the range.
Given these technicals, we suggest a short-term hold with a keen eye on the behavior of stock near the trend-line. A long-term call could be taken depending on the directional movement of the stock about the trend-line. It would be nice to have tight trailing stop-losses to book profits in case of a sudden trend-reversal.
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